Apple Provides Hedge Against Tech Backlash

Image

Tim Cook, the chief executive of Apple, which stands apart from its tech rivals because it does not gather personal information to sell to advertisers.CreditAleksandar Plavevski/European Pressphoto Agency

By Robert Cyran

Dec. 19, 2017

Authorities worldwide are growing worried that Facebook, Google and Amazon are eroding privacy, using data to push rivals out of business and even affecting elections. This is one tech battle Apple can sit out. As a security-minded purveyor of hardware, it’s likely to avoid the worst of the blowback.

Europe will be the eye of the tech storm in 2018. The European Commission has already fined Google $2.8 billion for favoring its own services and burying rivals in search results. Regulators are deciding whether the Alphabet’s Android mobile operating system gives it another means of unfairly promoting its businesses. A bigger fine and reduced mobile revenue from Google search could result.

Fining Google for favoring its own products sets an unwelcome precedent for other tech firms. European Union authorities could forbid Amazon’s listing of own-label products ahead of competitors’ offerings.

The biggest danger comes in May when companies must comply with Europe’s General Data Protection Regulation. It requires that they seek explicit consent before using personal data. It’s probable many customers will not agree, which means Google could find it harder to customize Gmail ads and Facebook might not be able to use WhatsApp information to sell ads on other sites and apps. Customers also have the right to delete their data or port it elsewhere — reducing the ability of Amazon and Google to lock in cloud customers.

Parts of Europe’s agenda may be adopted elsewhere. And lawmakers in the United States are mulling putting big internet firms under the oversight of the strict Federal Communications Commission, rather than the lax Federal Trade Commission.

Apple is the biggest tech giant, worth nearly $900 billion, yet it stands curiously apart. The company sells lots of expensive phones, but it’s no monopolist. The iPhone’s combined share of the five biggest European markets is under 20 percent, says Kantar Worldpanel. The company also uses privacy as a selling point. It does not gather personal information to sell to advertisers, places similar restrictions on app developers and fights government attempts to unlock suspects’ phones. Apple’s inability to master social media means its business does not affect elections either.

Apple is not carefree. The company’s attempts to slither out of paying taxes make it a target in its own right. At worst, though, the result is probably a fine. Its rivals are looking at major, forced changes in their business models.

Robert Cyran is a columnist for Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.